REDD in Vietnam: issues, opportunities, and linkages

03 November 2010 | News story

Forest loss and degradation are responsible for about one-sixth of global greenhouse gas emissions, more than the entire transport sector. It is not only a major contributor to global warming but there is evidence that it’s possible to put a price on standing forest that makes conservation the economically rationale land use. In technical terms, there are large areas of forest where the price-elasticity of supply is high, meaning that decisions about whether to keep or clear forest are highly responsive to its price.

As prospects for a binding global climate treaty this year have evaporated, leaders and environmental advocates have focused their efforts on reaching agreement on a few top priorities, including preserving tropical forests and helping developing countries cope with climate change.

The Washington Post, April 13, 2010

What price is needed to encourage forest owners to stop clearing and start conserving forests? A USAID-funded project in Vietnam’s Lam Dong Province showed that if forest owners are offered $15 per hectare per year, they protect forest rather than convert it to agriculture or some other land use. Previously, the government had offered $5 per hectare but that did not change behavior and forest clearing continuedit was an unconditional welfare payment. So the USAID project indicates that the “tipping price” is between $5 and $15 per hectare per year.

This price sensitivity makes forest conservation potentially a very efficient way to reduce green house gas emissions, which is why reducing emissions from deforestation and forest degradation (REDD) was first put on the agenda of the UN Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP) 11 in 2005 and included as an expanded concept, “REDD+”, incorporating enhancement of existing forest carbon stocks, in the Bali Action Plan at COP13 in 2007. Recognition of the importance of forest conservation in mitigating climate change was one of the few points of agreement at COP15 in Copenhagen.

For REDD+ to succeed, poor nations with forests must implement policies that reduce and eventually eliminate forest clearing and degradation, and/or policies that enhance existing forest carbon stocks. Those that do will be rewarded financially from governments and businesses in the developed world that need to offset their own emissions. The concept is simple; the reality is likely to be much harder and many organizations are studying the technical, policy, and financial barriers to its successful implementation. For example, IUCN has focused on the legal preconditions for fair and effective REDD+ while the Regional Center for Forests and People (RECOFTC) in Bangkok has looked at the scope for community participation in REDD+.

Established in 2008 and primarily funded by the Norwegian government, the UN-REDD Programme (http://www.un-redd.org/) helps developing countries, including Vietnam, to get ready to participate in a future REDD+ mechanism. Of the “REDD readiness” issues that need to be addressed, the government of Vietnam identified the design of a transparent and equitable benefit distribution system (BDS) as a priority. This is innovative because few countries have looked at how benefits should be distributed. It is also courageous because, unlike carbon monitoring and other technical challenges, it raises sensitive governance issues.

Vietnam is well placed to develop a REDD+ compliant BDS as a result of many years of experience with similar systems such as Programme 661 (also known as the Five Million Hectare Reforestation Programme), which pays households to protect forests, and internationally supported payments for forest environmental services (PFES) pilot projects. The focus on BDS also capitalizes on Vietnam’s functioning administration, social stability, and relatively high degree of tenure security. These are assets that Vietnam can use to gain a competitive edge in a future international REDD+ regime. Vietnam also has large areas of degraded forest that if allowed to regenerate naturally could rapidly sequester carbon and conserve soil and water. (In fact, 1.2 million out of Vietnam’s 16 million hectares of forest are classified as “chua co rung” or “not yet forested”.)

To assist the government of Vietnam design a REDD+ BDS, UN-REDD funded a study of BDS issues and options under the leadership of the Ministry of Agriculture and Rural Development (MARD). The study was coordinated by IUCN and carried out by a team of national and international consultants in late 2009. The study’s executive summary was presented at COP15 and a final version was completed in January 2010 and is available from http://tinyurl.com/vietnam-bds-study.

The study identified constraints that need to be addressed in order to create a REDD+ BDS, and ways to address them. In doing so it examined the practicalities of REDD+ implementation in Vietnam. It therefore provided a reality check at a time when much of the REDD+ discourse is abstract and theoretical. The study reached several major conclusions.

First, REDD+ could generate about $80-100 million/year in Vietnam3-4 times current ODA support to the forestry sector. However, this potential can only be realized if government takes steps to ensure that REDD+ is implemented effectively. This involves: developing a comprehensive REDD+ strategy to generate and sustain emissions reductions at the local level; developing the necessary capacity to measure and report on emissions reductions; and putting in place a BDS that meets the requirements of international investors and the needs of forest managers.

Second, REDD+ is subject to negotiations under the auspices of the UNFCCC. Although the principles are becoming clearer, the details remain to be determined. It is therefore not possible at this point to be prescriptive in terms of how REDD+ should be implemented in Vietnam. Nevertheless, the study was able to identify several clear policy options for government consideration at this early stage. In other instances, the study identified further work that is needed to identify the most appropriate approach.

Third, because REDD+ is still under negotiation, it doesn’t exist legally yet. This fact is obscured by the many “REDD” projects that are underway in Vietnam and other countries targeting the voluntary carbon market. But REDD+ will probably be implemented at the national level in order to avoid the problem of within-country leakage. This implies that funds will flow to a national entity before distribution to those responsible for the emissions reductions (assuming emissions have indeed been reduced below the reference level). Reporting on national performance is more complex than reporting on site performance because it must encompass the entire forest estate, not just “islands” of conservation success in a “sea” of deforestation.

Finally, REDD+ has much to learn from PFES projects, which have been successfully piloted in Vietnam, but the two should not be confused. Both concepts involve rewarding land users for the environmental services they provide, but there are several important differences, including the fact that under PFES as currently practiced in Vietnam, the buyers of environmental services are local companies that have been mandated to do so by central government at an administratively set price. Buyers of REDD+ credits, on the other hand, would be foreign entities that offer prices that have been determined internationally, possibly through market forces. This means that REDD+ may not be managed in the same way as existing PFES schemes.

Of the study’s policy recommendations, several stand out. The first is to address the legal constraint that limits local community participation in REDD+. (Experience from Lam Dong and other projects shows that the allocation of forest to communities rather than households increases equity in the payment distribution and reduces the scope for elite capture.) The 2004 Forest Protection and Development Law recognizes communities as forest owners. But the Civil Code does not recognize community as a legal entity, which means that they cannot sign contracts. A MARD review of community forestry in 34 of Vietnam’s 40 forested provinces showed that provincial governments are reluctant to grant long-term forest tenure to communities because they cannot assign responsibility to individuals for breaches of contract. Given the government’s obsession with fire suppression, government officials are understandably nervous about allocating forests to groups that cannot be legally held to account for their actions.

It is also necessary to avoid a potentially perverse outcome of putting a price on forest carbon without the necessary safeguards. If this price is high enough there will be a strong incentive to control forest, and since two-thirds of Vietnam’s forest is owned by state owned companies or people’s committees, REDD+ could run counter to the government’s long standing policy of allocating forest to households and communities. In some provinces, the allocation of forest that belongs to bankrupt state forest enterprises has stalled because the provinces do not want to take responsibility for the ensuing redundancy payments. If the value of the standing forest increased sharply, the incentive to allocate forests to non-state actors might weaken.

A related issue is that any BDS, however well designed, will inevitably give rise to complaints about who benefits. To ensure the credibility of the BDS, it is necessary to build in a recourse mechanism so that complaints can be independently reported and addressed. In Vietnam, citizens’ complaints have to be submitted to the responsible government department. But if the same department is responsible for the BDS, then a conflict of interest arises. Some form of third-party oversight is required. Vietnam has little experience of civil society participation in environmental decision making and there are no models that can be used as-is. However, a Vietnamese NGO has established a telephone hotline and case tracking system that has demonstrably increased public participation in reporting on the illegal wildlife trade (over 2,300 cases have been logged since the hotline started in January 2005). The NGO also monitors the government response and publishes a quarterly newsletter. A REDD+ compliant BDS could apply a similar model.

The fact that countries will be rewarded for national level performance has an important implication: if emissions reductions at one location are not to be offset by emissions increases elsewhere, REDD+ must be accompanied by substantially improved forest law enforcement and governance (FLEG). This is a key issue in Vietnam where the Forest Protection Department (FPD) records 50,000-60,000 forest crimes a year while the area of natural forest continues to decline. In other words, FPD is strong at suppression but weak at prevention, which explains the continued loss of natural forest. (The recent increase in forest cover at the national level is due entirely to low conservation value plantations.) From a REDD+ perspective, this is a failure because the timber has already been cut and the emissions are presumed to have occurred. And as Vietnam continues to develop rapidly, the demand for timber has grown. Even Vietnam’s protected areas are vulnerable with frequent reports of poaching and illegal logging in national parks and nature reserves.

The World Bank launched a FLEG initiative in 2001. In 2003, the EU published a FLEGT Action Plan, where the “T” stands for international trade. The purpose is to use the incentive of access to the EU market for wood products to promote improvements in forest governance. Countries that cannot demonstrate that their wood product exports are made from legal timber will be banned from the EU market. (The US has introduced similar legislation.) In effect, the “T” adds teeth to FLEG. The action plan includes a provision for the negotiation of a Voluntary Partnership Agreement (VPA) between wood product exporters and the EU. In May, MARD sent a letter to the EU indicating its interest in starting VPA negotiations. These negotiations are an opportunity for reflection and reform to address Vietnam’s deep-seated forest governance problems.

A future REDD+ mechanism should reward forest owners for their efforts to conserve forests and reduce carbon emissions. But if REDD+ is to be fair and effectiveif it is to result in real emissions reductions and reward those who deserve to be rewardedimproved FLEG is a precondition. In the absence of improved FLEG, REDD+ could exacerbate conflict between forest owners. The inflow of significant funding could also block progress in a sector that badly needs innovation and reform. The REDD+ and FLEG agendas are therefore two sides of the same coin: they are mutually supportive and require careful sequencing and coordination.

Building on the work done in Vietnam, Sida’s Swedish Environmental Secretariat for Asia (SENSA) has supported a series of REDD+ BDS research and outreach events in Laos and Cambodia to accelerate learning between neighboring countries. All three countries (plus Thailand and Myanmar) have either applied to start or expressed interest in starting VPA negotiations with the EU. A key component of a VPA is a timber harvesting legality definition that is developed through a multi-stakeholder process. A VPA potentially offers a strong incentive for government to address regional timber flows from high-risk countries and to incorporate civil society feedback in the legality definitionkey elements of a national REDD+ strategy.